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Should I buy Greatland Gold shares at the current price?

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Greatland Gold (LSE: GGP) shares have been declining since the beginning of 2021. This is a stark difference to last year, when the stock had a phenomenal run.

I think there a few reasons why Greatland Gold shares have not delivered stellar returns year to date. Firstly, the positive results at its Havieron deposit are now factored in to the share price. Secondly, I think investors are focusing on its other licences to see if the firm can replicate its success.

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The company is a precious and base metal exploration and development business. On Monday it announced its Scallywag drill results. Here I’ll cover this announcement in detail and what it means for the company.

I’ve been bullish on Greatland Gold shares for some time. I’d still buy the stock but it’s very speculative. Hence I’d only invest what I could afford to lose.

Scallywag

Scallywag is Greatland Gold’s 100%-owned exploration licence in the Paterson region of Western Australia. It has also made an application for full exploration at Rudall and Canning. This means that it will have three 100%-owned licences in the area.

I think it’s worth noting that while Scallywag sits adjacent to the Havieron and Juri joint ventures with Newcrest Mining, it does not form part of these two partnerships.

The results

Earlier this week, Greatland Gold announced the results of the remaining four drill holes from the 2020 drilling campaign at Scallywag.

In a nutshell, it looks promising. The company highlighted that the “drill results provide further evidence of pathfinder element anomalism potentially distal to intrusion-related mineralised systems”.

But what does this mean for those who do not understand the industry jargon? Well, the need-to-know element of this is that the findings are similar to what was discovered nearby at Havieron. Of course, there’s no guarantee this will lead to any success, but I guess that’s the nature of exploration.

Greatland Gold has used these results to identify the next set of targets for drill testing. This follow-up drilling will commence in the coming weeks and months. What it has confirmed is the area’s prospectivity and merit for further exploration.

What next?

The Scallywag drill programme is at the first stage of an extended drilling programme across its 100% owned licences. So far it looks as if it’s on the right track, which to me is encouraging. This optimism should be positive for Greatland Gold shares.

I think it’s pleasing to see that the company has a proven track record when it comes to exploration. It’s this approach that has enabled it to see success so far at Havieron. The exploration company drills selective targets, analyses the information and refines target areas.

Risks

That said, Greatland Gold is still working towards commercial production at its Havieron deposit. It has not generated any revenue or profits yet. For this reason it makes the shares a speculative prospect.

The stock is for those like me who can tolerate risk. Even though the results look encouraging at Scallywag, it could be unsuccessful there. This would be likely to impact the share price.

But for now, I think the Scallywag exploration results look promising. I’d snap up Greatland Gold shares at the current price.

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Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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